Recession Shape

A common way to describe a recession, in terms of how the recession appears in a graph of GDP movement over time. 'Shapes' are mostly letter-shapes (V, W, U, etc). Here are the most common recession shapes:

V-shaped recession - The simplest shape and basic form of recession, namely a broadly straight-lined angled decline to a trough or lowest point, followed by a relatively quick 'bounce' upwards again in a straight-lined angled rise back to the pre-recession level.

U-shaped recession - Like the V-shaped recession but with a longer period at the lowest point. Alternatively called a 'Bathtub Curve'.

W-shaped recession - Also called a double-dip recession, essentially characterized by a recession whose recovery is interrupted by a further decline into recession, before final recovery.

L-shaped recession - A recession which fails to recover for a very long period, typically ten years or longer, or indefinitely, i.e., pre-recession levels of GDP and GDP growth are not seen again for many decades. Also, where extremely severe an L-shaped recession might more traditionally be called a depression. The Japanese recession of the 1990s is gererally regarded as an example of an L-shaped recession. The recessions in the US and large parts of Europe following the 2007/8 global financial crisis might easily be interpreted as similarly long-term and ominously L-shaped recessions.

WW-shaped recession - A recession which lurches from recovery back into recession several times, which given the implication of the need for such a term, contains more ups and downs than a triple-dip recession. As with many of the terms referring to types of recessions, the need for the terminology is produced more by finely balanced definitions of a recession, rather than the ups and downs of economic performance, which are generally happening anyway whether in growth or recession. It's all a matter of degree; i.e., where recessions are defined by very tiny degrees of contraction (as happens in modern times), then 'multiple dip' and convoluted letter-shaped terminology tend to be used more frequently.

J-shaped recession - This shape unusually and optimistically refers to a recession which recovers into a boom or period of high growth, i.e., the level of GDP immediately beyond recovery continues to increase strongly and substantially above pre-recesssion levels for a period exceeding the duration of the recession. This sort of recessionary recovery might be fuelled by technology innovation, or discovery and exploitation of new natural resources, etc.

Inverted Square Root Sign-shaped recession - Otherwise technically the 'inverted radical symbol-shaped' recession, this term, apparently coined by financier George Soros, is very rarely used, and is included here mainly for curiosity. It refers to an L-shaped recession containing a small bounce (partial initial recovery) before a prolonged or indefinite period of depressed/recessionary-level economic conditions. Confusingly an inverted radical sign, with or without the long horizontal overline, seems not to fit the effect Soros described. A reverse tick or check sign is more apt.

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